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Cordea Savills has closed its Prime London Residential Development Fund after raising further capital to boost the fund's purchasing power to over £200 mln (€233 mln).

The vehicle seeks to capitalise on the shortage of both debt and equity in the development market and has a target return of 18-20% per annum over a four year life.

To date, the Prime London Residential Development Fund has invested in three schemes with a total gross development value in excess of £160 mln. The developments comprise a former chapel and a former school building located on adjoining sites between the Kings Road and the Fulham Road in Chelsea, as well as a 1950s residential apartment block in Hereford Square, South Kensington.

Terms have also been agreed on two further joint venture development opportunities, including an office-to-residential development in the West End and a new-build development in a prime location within the Royal Borough of Kensington & Chelsea.

'Since the financial crisis, banks have been reluctant to lend on property development, and there has been a shortage of newly-built units in prime London locations despite ever-increasing demand,' said Brian D’Arcy Clark, head of residential acquisitions at Cordea Savills. 'This has created an opportunity to provide the financing that developers need to commence schemes with excellent potential.'

The fund will benefit from favourable market conditions including strong demand for prime London residential property from overseas investors, especially from Asia, and the continued weakness of the sterling which offers those buying in US dollars or US-dollar pegged currencies a discount on purchasing UK property, the fund manager said.